SECOND DIVISION

[G.R. No. 230597. March 23, 2022.]

ARIEL M. REYES, petitioner, vs. RURAL BANK OF SAN RAFAEL

(BULACAN), INC., FLORANTE VENERACION, CELERINA
SABARIAGA, ALICIA FLOR KABILING, FIDELA MANAGO,
CEFERINO DE GUZMAN, and RIZALINO QUINTOS,
respondents.

DECISION

HERNANDO, ** J : p

This is a Petition for Review on Certiorari 1 assailing the July 22, 2016
Decision 2 and March 8, 2017 Resolution 3 both issued by the Court of
Appeals (CA). The CA Decision affirmed the September 30, 2014 Decision 4
issued by the National Labor Relations Commission (NLRC), denying
petitioner Ariel M. Reyes' (Reyes) appeal, and reversing the February 24,
2014 Labor Arbiter's Decision, 5 which found him illegally dismissed and
entitled to money claims. Meanwhile, the CA Resolution denied Reyes'
Motion for Reconsideration.
The Factual Antecedents:
Respondent Rural Bank of San Rafael (Bulacan), Inc. (RBSR) is a
domestic banking corporation while respondents Florante Veneracion
(Veneracion), Celerina Sabariaga (Sabariaga), Alicia Flor Kabiling (Kabiling),
Fidela Manago (Manago), Ceferino De Guzman (De Guzman), and Rizalino
Quintos (Quintos) (collectively, respondents), are members of RBSR's Board
of Directors.
Sometime in 2012, several stockholders of RBSR complained about the
discrepancies in the amounts of the purchase price of stock subscriptions
appearing in the original receipts as against the duplicate copies issued by
the bank. The anomaly involved several millions of pesos collected from
stockholders of RBSR which, if not corrected, will certainly tarnish the image
and integrity of the latter.
Acting on this anomaly, RBSR conducted an investigation and
confirmed the irregularities. It was discovered that in the original receipts
given to the stockholders, the stated price of shares ranged from P250.00 to
P275.00, but in the duplicate copies retained by RBSR, only P100.00 was
indicated. Moreover, the original receipts were signed by Flordeliza Cruz,
then President of RBSR, while the duplicate copies were signed either by its
then Treasury Head Emilline C. Bognot (Bognot), or Branch Manager
Reynaldo Eusebio, Jr. (Eusebio).
Thus, in compliance with the Manual of Regulations for Banks
mandating the prompt report of anomalies to the Bangko Sentral ng Pilipinas
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 (BSP), RBSR's Board of Directors approved a Report on Crimes and Losses
and directed Reyes — as Compliance Officer — to certify the same. However,
Reyes refused to certify the report, reasoning that no independent
investigation was conducted, and that he cannot completely validate the
same for lack of material data and evidence, and that he was being
pressured to certify the report. CAIHTE

Thereafter, Reyes claimed that instead of furnishing him the hard

copies of the reports and its original attachments to enable him to verify and
certify the same, RBSR issued him two show cause orders and put him on
preventive suspension for neglect of duty. Meanwhile, RBSR contended that
several administrative hearings were scheduled to hear Reyes' side, but all
were ignored.
On March 25, 2013, Reyes, together with Bognot and Eusebio
(complainants) — who were principally accused of theft/misappropriation of
funds in connection with the anomaly — filed a Complaint 6 against
respondents for illegal suspension and money claims. An Amended
Complaint 7 was subsequently filed to include illegal dismissal, in view of
their eventual dismissal from work.
Ruling of the Labor Arbiter:
In a Decision 8 dated February 24, 2014, Labor Arbiter Reynaldo V.
Abdon found RBSR guilty of illegally dismissing Reyes, Bognot, and Eusebio.
The arbiter's ruling was mainly based on RBSR's failure to file its Position
Paper and submit its evidence during the proceedings, which constrained the
arbiter to rule on the matter based solely on the complainants' evidence.
Based on the complainants' evidence and submissions, the arbiter
found that complainants' dismissal was without a valid cause, and that they
were denied due process for having been summarily dismissed. Further, it is
incumbent upon the employer to show proof that the employee was
dismissed for a just or authorized cause, which the bank failed to establish
since it did not file its Position Paper and submit its evidence.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby
declared that complainants were illegally terminated by respondents.
Consequently, respondent Rural Bank of San Rafael Bulacan and
individual respondents Florante Veneracion, Celerina Sabariaga, Alicia
Flor C. Kabiling, Fidela Manago, Fabian Cordero, Ceferino De Guzman
and Rizalino Quintos III are jointly and severally DIRECTED to PAY
complainants to (sic) their backwages and separation pay, accrued
leave benefits and proportionate 13th month pay as follows:

Name Backwages Separation 13th Month

Pay Pay

Ariel M. Reyes P399,960.00 P180,000.00 P8,400.00

Emilline C. Bognot 333,300.00 150,000.00 7,000.00

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 Reynaldo M. 447,055.29 442,629.00 9,389.10
Eusebio Jr.

Additionally, respondents are ordered to pay complainants'

attorney's fee in the sum of P197,773.33.
Other claims are denied for lack of basis.
SO ORDERED. 9

Thus, respondents elevated the case to the NLRC.

Ruling of the National Labor
Relations Commission:
In its Decision 10 promulgated on September 30, 2014, the NLRC
reversed the arbiter's ruling. Notably, the NLRC applied a liberal
interpretation and relaxed procedural rules, and held that substantial justice
must prevail over technicalities. Thus, the NLRC allowed respondents to
submit countervailing evidence even on appeal.
On the substantial issue, the NLRC found that complainants were not
illegally dismissed. Respondents were able to discharge the burden of
proving that they had a just cause to terminate complainants' employment.
The dispositive portion of the NLRC Decision reads:
WHEREFORE, the appeal is GRANTED. The decision of the
labor arbiter is hereby reversed and set-aside. The complaint is
dismissed for lack of merit. DETACa

SO ORDERED. 11

Aggrieved, Reyes and Bognot filed a Petition for Certiorari 12 before the
CA. They imputed grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the NLRC in relaxing procedural rules and allowing
respondents to submit their evidence for the first time, even if the case was
already on appeal.
Meanwhile, Eusebio no longer pursued his case.
Ruling of the Court of Appeals:
In its Decision 13 dated July 22, 2016, the CA affirmed the NLRC
Decision and found no grave abuse of discretion on the part of the latter in
relaxing its procedural rules. The CA held that the respondents' failure to file
their Position Paper and submit their evidence was justified and satisfactorily
explained, "since they were not given summons, nor notified of the
scheduled preliminary conference and further hearings after the amended
complaint was filed." 14 After having settled the procedural issue, the CA
proceeded to rule that "petitioners were validly dismissed for a just and valid
cause x x x." 15
The dispositive portion of the CA Decision reads:
WHEREFORE, the foregoing considered, the Petition for
Certiorari is DENIED. The assailed Decision and Resolution of public
respondent NLRC are AFFIRMED in toto.
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 SO ORDERED. 16

Reyes and Bognot filed a Motion for Reconsideration, but it was denied
in a Resolution 17 dated March 8, 2017.
Unyielding, Reyes elevated the case before this Court via a Petition for
Review on Certiorari. On the other hand, Bognot yielded and no longer joined
Reyes' petition.
Issues
1. Whether the CA erred in affirming the NLRC Decision which
reversed the ruling of the Labor Arbiter; and
2. Whether Reyes was illegally dismissed.
Our Ruling
The appeal is meritorious.
The CA erred in affirming the
NLRC Decision.
a. Respondents were not denied
due process. A liberal
interpretation of the procedural
rules was not warranted.
On this point, Reyes mainly argues that —
The Court of Appeals abused its discretion amounting to lack or
excess of jurisdiction in affirming the Decision of the NLRC which in
effect declared that the NLRC did not abuse its discretion in applying
the principle of liberal application of the procedural rules
notwithstanding that it was not made an issue in the proceedings
before the Labor Arbiter, and ruling that respondent's Appeal is
meritorious even though the appeal does not fall to (sic) any of the
grounds for filing of appeal before the Commission. 18
Meanwhile, respondents assert that the NLRC and CA were correct in
allowing them to present evidence, albeit belatedly; otherwise, their right to
due process would have been denied. Further, they claim that "there was no
summons sent to any of the private respondents after the filing of the
amended complaint." 19
Respondents are wrong.
Due process has been described as a "malleable concept anchored on
fairness and equity." 20 Indeed, at its core is simply the reasonable
opportunity for every party to be heard. The late constitutionalist Father
Joaquin G. Bernas, S.J., further expounds on this concept: aDSIHc

Whether in judicial or administrative proceedings, therefore,

the heart of procedural due process is the need for notice and an
opportunity to be heard. Moreover, what is required is not
actual hearing but a real opportunity to be heard. Thus, one
who refuses to appear at a hearing is not thereby denied due
process if a decision is reached without waiting for him.
Likewise, the requirement of due process can be satisfied by
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 subsequent due hearing. 21 (Emphasis supplied).
Applying this principle, a review of the records will reveal that during
the proceedings before the arbiter, respondents have been accorded ample
opportunity to present their side. The arbiter made the following
observations:
On June 4, 2013, after complainants filed their amended
complaint, they filed their Position Paper. The respondents failed to
appear but their counsel and representative appeared much earlier
than the scheduled date of hearing and secured a photocopy of
amended complaint. Thus, this Office directed the parties to appear
[in] another conference on June 19, 2013 at 10:30 am to give
respondents the opportunity to submit their position paper.
Complainants manifested that if respondents would still fail to file
their position paper on the next setting, this case should be deemed
submitted their (sic) decision ex-parte.
On June 19, 2013, only complainants appeared and moved to
submit this case for decision in view of the failure of the respondents
to appear and submit their position paper despite ample time to (sic)
given to them. 22
Based on this undisputed finding, it appears that respondents have
unjustifiably missed at least two settings: that on June 4, 2013, and that on
June 19, 2013. To stress, respondents missed the hearing on June 19, 2013
despite having been directed prior by the arbiter to attend. Moreover, it
must be noted that respondents, at this point in time, have already obtained
a copy of the amended complaint which would have enabled them to
intelligently respond.
Respondents further explained in their Memorandum 23 filed before the
CA:
16. x x x Here, there was no summons sent to any of the
private respondents after the filing of the amended complaint. There
was also no mandatory conciliation and mediation conference in two
settings. As the Decision of the Honorable Labor Arbiter states, "On
June 4, 2013, after the complainants filed their amended complaint,
they filed their Position Paper." There was no mention of any issuance
of summons to the private respondents and setting of mandatory
conciliation and mediation conference. Further, no copy of the
Position Paper was ever sent or received by the respondents. 24
Ruling for the Respondents, the CA held:
In this case, it is conceded that private respondents lost the
case before the Labor Arbiter as they were not able to submit a
position paper and adduce evidence in their behalf, nor to attend the
scheduled preliminary conference. As found by public respondent
NLRC, their failure to do so was satisfactorily explained, since they
were not given summons, nor notified of the scheduled preliminary
conference and further hearings after the amended complaint was
filed. For this reason, public respondent NLRC ruled that such
procedural oversights were not deliberate, dilatory or obstructive
omissions on the part of private respondents. In short, their failure to
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 present evidence and to attend the hearings can be justified due to
lack of notice. x x x 25
We do not agree.
While it may be true that the arbiter failed to issue summons, such
circumstance cannot operate as a denial of respondents' right to due
process because the fact remains that respondents have already
obtained a copy of the amended complaint, and have been duly
notified of the June 19, 2013 hearing. Section 3 of the 2011 NLRC Rules
of Procedure (2011 NLRC Rules) provide:
SECTION 3. Issuance of Summons. — Within two (2) days
from receipt of a complaint or amended complaint, the Labor Arbiter
shall issue the required summons, attaching thereto a copy of the
complaint or amended complaint and its annexes, if any. The
summons shall specify the date, time and place of the mandatory
conciliation and mediation conference in two (2) settings.
Clear from the foregoing that the issuance of summons is done in order
to apprise the respondent of the case filed and as a means to furnish them a
copy of the complaint so they can intelligently respond. Given the
circumstances in the present case, the issuance of the summons would have
been a mere superfluity since again, respondents have already obtained a
copy of the amended complaint and notified of the upcoming hearing date.
ETHIDa

To add, respondents' absence during the June 4, 2013 hearing is

likewise unexplained, as confirmed by the NLRC in its Decision, to wit:
It appears that the same day that the parties met in an attempt
to settle, which failed, the complainants filed an amended
complaint in Regional Arbitration Branch III. No summons was issued
after the amendment of the complaint. Thereafter, the complainants
filed their position paper which was received by RAB III on June 4,
2013, during a hearing at which respondents were not
present. The labor arbiter sent a notice of hearing dated June 6,
2013, informing respondents to appear for a conference on June 19,
2013 at 10:30 a.m. However, the registry return card on record,
issued by the bureau of posts shows, that the respondents did not
receive this notice of hearing until June 20, 2013. x x x 26 (Citations
omitted.) (Emphases supplied.)
Thus, a closer examination at the findings of facts of both the Labor
Arbiter and NLRC will reveal that there is no incongruence; in fact, they are
in accord with and complement each other on the following points: first, that
respondents were able to earlier secure a copy of the amended complaint;
second, that respondents were absent during the June 4, 2013 and June 19,
2013 hearings; and third, that respondents' absences are unexplained.
Furthermore, we take note of the fact that from the date the
respondents obtained a copy of the amended complaint in early June 2013,
up to the promulgation of the arbiter's Decision on February 24, 2014, there
was no initiative made by them to demand their day in court, so to speak.
The records are simply bereft of even the slightest hint of participation from
the respondents during the proceedings before the Labor Arbiter. If
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 respondents truly hold sacred their right to due process as they so fervently
contend before the NLRC and the CA, they would have wasted no time nor
missed no opportunity to assert such right as early as during the initial
stages of the proceedings. They could have at least pleaded for the arbiter to
reopen the proceedings and admit their Position Paper, if there ever was
one. At the very least, respondents were well-aware that a complaint was
filed against them and this should have prompted them to be more proactive
in the proceedings. Unfortunately, they failed to come through even in these
simplest of tasks. In the Court's view, this cavalier attitude exhibited by
respondents reeks of negligence and disrespect to duly instituted authorities
and rules of procedures, either of which this Court can never tolerate.
While the Court commends the NLRC and the CA in upholding
substantial justice, such principle must always be balanced with respect and
honest efforts to comply with procedural rules. It cannot always be about
substantial justice, especially to the point of disrespect and utter disregard
to procedural rules. In Tible & Tible Company, Inc. v. Royal Savings and Loan
Association, 27 an eloquent explanation regarding this balance was made:
Much reliance is placed on the rule that "Courts are not slaves
or robots of technical rules, shorn of judicial discretion. In rendering
justice, courts have always been, as they ought to be, conscientiously
guided by the norm that on balance, technicalities take a backseat
against substantive rights, and not the other way around." This rule
must always be used in the right context, lest injustice, rather than
justice would be its end result.
It must never be forgotten that, generally, the application of the
rules must be upheld, and the suspension or even mere relaxation of
its application, is the exception. This court previously explained:
The Court is not impervious to the frustration that
litigants and lawyers alike would at times encounter in
procedural bureaucracy but imperative justice requires
correct observance of indispensable technicalities
precisely designed to ensure its proper
dispensation. It has long been recognized that strict
compliance with the Rules of Court is indispensable for
the prevention of needless delays and for the orderly and
expeditious dispatch of judicial business.
Procedural rules are not to be disdained as
mere technicalities that may be ignored at will to
suit the convenience of a party. Adjective law is
important in ensuring the effective enforcement of
substantive rights through the orderly and speedy
administration of justice. These rules are not intended to
hamper litigants or complicate litigation but, indeed to
provide for a system under which a suitor may be heard
in the correct form and manner and at the prescribed
time in a peaceful confrontation before a judge whose
authority they acknowledge. cSEDTC

It cannot be overemphasized that procedural

rules have their own wholesome rationale in the
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 orderly administration of justice. Justice has to be
administered according to the Rules in order to
obviate arbitrariness, caprice, or whimsicality. x x x
28

I n Loon v. Power Master, Inc., 29 the Court laid down the following
pronouncement:
In labor cases, strict adherence to the technical rules of
procedure is not required. Time and again, we have allowed evidence
to be submitted for the first time on appeal with the NLRC in the
interest of substantial justice. Thus, we have consistently supported
the rule that labor officials should use all reasonable means to
ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure, in the interest of due
process.
However, this liberal policy should still be subject to rules of
reason and fairplay. The liberality of procedural rules is
qualified by two requirements: (1) a party should adequately
explain any delay in the submission of evidence; and (2) a
party should sufficiently prove the allegations sought to be
proven. The reason for these requirements is that the liberal
application of the rules before quasi-judicial agencies cannot be used
to perpetuate injustice and hamper the just resolution of the case.
Neither is the rule on liberal construction a license to disregard the
rules of procedure. 30
In the present case, we have already extensively discussed how
respondents failed to adequately explain and justify their non-participation in
the proceedings before the arbiter. Thus, the application of a more liberal
policy is unwarranted, contrary to the rulings of the NLRC and the CA.
Besides, the policy of relaxed procedural rules in labor proceedings is mainly
for the benefit of the employee, and not the employer, as will be discussed
below.
b. Relaxed and liberal
interpretation of labor
procedures — mainly for the
benefit of employee, and not the
employer.
Preliminarily, the Court wishes to address respondents' argument that
there were several procedural lapses committed by the arbiter in conducting
the proceedings. Respondents repeatedly assert:
Section 3 of the 2011 NLRC Rules of Procedure states that "Within two
(2) days from the receipt of a complaint or amended complaint, the
Labor Arbiter shall issue the required summons, attaching thereto a
copy of the complaint or amended complaint and its annexes, if any.
The summons shall specify the date, time and place of the mandatory
conciliation and mediation conference in two (2) settings x x x." Here,
there was no summons sent to any of the private respondents after
the filing of the amended complaint. There was also no mandatory
conciliation and mediation conference in two settings. As the Decision
of the Honorable Labor Arbiter states, "On June 4, 2013, after
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 complainants filed their amended complaint, they filed their Position
Paper.'' There was no mention of any issuance of summons to the
private respondents and setting of mandatory conciliation and
mediation conference. Further, no copy of the Position Paper was ever
sent or received by the private respondents. 31 (Underscoring in the
original)
In citing the 2011 NLRC Rules, respondents intimate that such should
have been strictly followed; that the arbiter must be faulted for not doing so.
However, respondents quickly backtracked and asserted before the NLRC
that the rules — the very same one they demand to be strictly enforced —
must be relaxed, obviously when it suited their favor. In the Court's view,
this flip-flopping stand by the respondents betrays fairness in their position.
In any case, respondents in the present case are not entitled to be
accorded a liberal interpretation of the rules; the same being primarily
granted for the employee's favor, and not the employer. SDAaTC

The principles embodied by all prevailing labor rules, legislations, and

regulations are derived from the Constitution, which intensely protects the
working individual and deeply promotes social justice. Article II, Section 18 of
the 1987 Constitution provides:
SECTION 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote
their welfare.
Meanwhile, Article XIII, Section 3 state:
SECTION 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
Lastly, Article 4 of PD 442 32 or the Labor Code, provides:
Article 4. Construction in favor of labor. — All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in
favor of labor.
The measures embedded in our legal system which accord specific
protection to labor stems from the reality that normally, the laborer stands
on unequal footing as opposed to an employer. Indeed, the labor force is a
special class that is constitutionally protected because of the inequality
between capital and labor. 33 In fact, labor proceedings are so informally
and, as much as possible, amicably conducted and without a real need for
counsel, perhaps in recognition of the sad fact that a common employee
does not or have extremely limited means to secure legal services nor the
mettle to endure the extremely antagonizing and adversarial atmosphere of
a formal legal battle. Thus, in the common scenario of an unaided worker,
who does not possess the necessary knowledge to protect his rights, pitted
against his employer in a labor proceeding, We cannot expect the former to
be perfectly compliant at all times with every single twist and turn of legal
technicality. The same, however, cannot be said for the latter, who more
often than not, has the capacity to hire the services of a counsel. As an
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 additional aid therefore, a liberal interpretation of the technical rules of
procedure may be allowed if only to further bridge the gap between an
employee and an employer.
Relevant to this is Section 2 of the 2011 NLRC Rules which stipulates:
SECTION 2. CONSTRUCTION. — These Rules shall be
liberally construed to carry out the objectives of the
Constitution, the Labor Code of the Philippines and other
relevant legislations, and to assist the parties in obtaining just,
expeditious and inexpensive resolution and settlement of labor
disputes. (Emphasis supplied.)
As can be gleaned above, the 2011 NLRC Rules shall be liberally
construed in order to attain two purposes: to carry out the objectives of the
Constitution and relevant labor laws, and to assist the parties in obtaining a
just, expeditious and inexpensive resolution and settlement of labor
disputes. Focusing on the first purpose, We recall that one of the objectives
of the Constitution is to accord special protection to labor. With this, it would
therefore be fitting to say that the rules shall be liberally interpreted in order
to accord special protection to labor. Truly, those who have less in life,
should have more in law.
In Vicente v. Employees' Compensation Commission, 34 the Court held:
The court takes this occasion to stress once more its abiding
concern for the welfare of government workers, especially the humble
rank and file, whose patience, industry, and dedication to duty have
often gone unheralded, but who, in spite of very little recognition,
plod on dutifully to perform their appointed tasks. It is for this reason
that the sympathy of the law on social security is toward its
beneficiaries, and the law, by its own terms, requires a construction
of utmost liberality in their favor. It is likewise for this reason that the
Court disposes of this case and ends a workingman's struggle for his
just dues. 35 (Citation omitted)
Further, as explained by Prof. Azucena:
In carrying out and interpreting the Labor Code's provisions and
its implementing regulations, the working man's welfare should be
the primordial and paramount consideration. This kind of
interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the New
Labor Code. The policy is to extend the decree's applicability to a
greater number of employees to enable them to avail of the benefits
under the law, in consonance with the State's avowed policy to give
maximum aid and protection to labor. 36 acEHCD

This is not to say however that the rules may never be relaxed in favor
of the employer, and that every labor dispute will be automatically decided
in favor of labor, thus:
Protection to labor and resolution of doubts in favor of labor
cannot be pursued to the point of deliberately committing a
miscarriage of justice. The right to obtain justice is enjoyed by all
members of society, rich or poor, worker or manager, alien or citizen.
Justice belongs to everyone. It is not to be blinded or immobilized by
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 the fact of one's being economically underprivileged. x x x 37

In certain cases, of course, a liberal approach to the rules may be had

even if it favors the employer. Such allowance, however, must be measured
against standards stricter than that imposed against the worker, and only in
compelling and justified cases where the employer will definitely suffer
injustice should such liberal interpretation be disallowed. Unfortunately for
respondents, this is not the situation in the present case.
Reyes was illegally dismissed by
RBSR.
Going now to the substantial issue, contrary to the findings of both the
NLRC and the CA, we find that Reyes was illegally dismissed.
In dismissing Reyes, the records bare that RBSR sent him the following:
first, a document with the subject "Show Cause Order and Preventive
Suspension" 38 dated March 22, 2013 part of which reads:
Last 12 February 2013, during the Regular Board Meeting, the
Corporate Secretary sent to you SES Form 6G, Report on Crimes and
Losses for the discrepancy of the purchase price of the stocks brought
by some stockholders. You refused to receive said document up until
the last day for reporting which is 22 February 2013 for the reason
that the same was sent via electronic mail.
xxx xxx xxx
Your refusal to do your duty shows that you have failed to
observe your principal function to oversee and coordinate the
implementation of the Compliance System. Your delays in transaction
and inaction despite repeated reminders to do your job have caused
significant prejudice and damage to the Bank.
xxx xxx xxx
Please explain in writing within five (5) days from receipt of this
Memorandum why you should not be held administratively
accountable and liable for your failure or refusal to fulfill your duties
as a Compliance Officer. Considering the gravity of the charge and in
order to safeguard the integrity of the bank records and operations,
you are hereby preventively suspended for a period of thirty (30)
days without pay effective immediately. You are however allowed
access to bank records to help explain your side. 39
Based on this document, it would appear that Reyes was being
charged with either willful disobedience or insubordination, or gross and
habitual neglect of duty, both of which are just causes for termination of
employment under the Labor Code.
Second, a document with the subject "Administrative Case" 40 dated
April 4, 2013 which notified Reyes of a hearing scheduled on April 10, 2013.
Third, a document with the subject "Show Cause Order" 41 dated April
19, 2013 which partly states:
Please explain within five (5) days from receipt of this order
why you should not be held administratively accountable and liable
for your participation in the theft/misappropriation of the funds
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 invested by and due to Mrs. Fidela M. Manago with the Rural Bank of
San Rafael and for covering up such anomaly/offense. 42
Interestingly, based on this show cause order, it would appear that the
charges against Reyes changed from either disobedience or neglect, to
commission of a crime or offense.
Lastly, Reyes was issued a "Notice of Termination" 43 dated April 26,
2013 which provides: SDHTEC

Please be informed that after due consideration of the

documents, records, testimonies, and admissions regarding your
administrative case, the gravity and number of offenses that you
committed, the magnitude of the loss and damage to the Bank and its
clients, and the nature and sensitivity of your position, management
has decided that there is sufficient and just cause for your
termination.
You were duly informed of the charges against you and given
sufficient time within which to explain your side with access to
records and documents of the Bank, yet you failed or refused to
submit any explanation. Neither did you appear during the scheduled
hearing. These omissions were also considered in deciding the
administrative case/s against you. 44
Book Five, Rule XXIII, Section 2 of the Omnibus Rules Implementing the
Labor Code provides:
SECTION 2. Standards of due process; requirements of
notice. — In all cases of termination of employment, the following
standards of due process shall be substantially observed:
I. For termination of employment based on just causes as
defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee
concerned, with the assistance of counsel if the employee so desires,
is given opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him; and
(c) A written notice of termination served on the employee
indicating that upon due consideration of all the circumstances,
grounds have been substantially established to justify his termination.
xxx xxx xxx
In King of Kings Transport, Inc. v. Mamac, 45 this concept of procedural
due process in labor proceedings is further expounded: HSAcaE

To clarify, the following should be considered in terminating the

services of employees:
(1) The first written notice to be served on the employees
should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period.
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 ''Reasonable opportunity'' under the Omnibus Rules means every
kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of
the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather
data and evidence, and decide on the defenses they will raise against
the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of facts and circumstances that will serve
as basis for the charge against the employees. A general description
of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged against the
employees.
(2) After serving the first notice, the employers should
schedule and conduct a hearing or conference wherein the employees
will be given the opportunity to: (1) explain and clarify their defenses
to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover,
this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
(3) After determining that termination of employment is
justified, the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment. 46
(Citations omitted.)
In the present case, while it is true that Reyes was given sufficient
opportunity to explain his side during the investigation, the Court cannot
help but notice the muddled and vague charges against him. Specifically, it
cannot be determined with reasonable certainty on what grounds the
charges pressed against Reyes were based on, and which ones were proven.
While it would appear that Reyes was initially charged with insubordination
or neglect of duty, the show cause order surprisingly accused him of
participation in the alleged theft/misappropriation, and neither is there any
showing that the same has been established nor is it specifically mentioned
as the reason for his dismissal. Instead, the termination letter sent to Reyes,
which is a mirror copy of the ones sent to Bognot and Eusebio, merely
employed general and loose statements. Neither is there any mention of
which specific rule or policy Reyes allegedly violated. Surely, this is not the
kind of notice contemplated by the Labor Code and its implementing rules. In
view of all the foregoing, the Court finds that respondents failed to comply
with the due process requirements in dismissing Reyes.
Moving forward, We likewise find that there was no valid cause to
dismiss Reyes.

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 The CA held:
With respect to petitioner Reyes — the Compliance Officer, it
was his bounden duty to promptly certify the Report on Crimes and
Losses detailing the irregularities; hence, for unjustifiably refusing to
act on the report, as he should, he was validly terminated. x x x
x x x It is obvious that petitioner Reyes was foot-lagging on
account of his complicity in the anomaly. As heretofore stated, an in-
depth and independent investigation may still be made after the filing
of the initial report. As We see it, there is no valid justification for
petitioner Reyes' refusal to certify the report which, incidentally, is for
the paramount interest of the bank. Thus, his act constitutes willful
disobedience of a lawful order of his employer. x x x 47
In affirming the NLRC Decision which held Reyes' dismissal as valid, the
CA considered Reyes' acts as willful disobedience, a just cause for the
termination of an employee based on Article 297 (formerly Article 282) of
the Labor Code.
We do not agree.
In Dongon v. Rapid Movers and Forwarders Co., Inc. 48 this Court held:
For willful disobedience to be a ground, it is required that: (a) the
conduct of the employee must be willful or intentional and (b) the
order the employee violated must have been reasonable, lawful,
made known to the employee, and must pertain to the duties that he
had been engaged to discharge. Willfulness must be attended by a
wrongful and perverse mental attitude rendering the employee's act
inconsistent with proper subordination. In any case, the conduct of
the employee that is a valid ground for dismissal under the Labor
Code constitutes harmful behavior against the business interest or
person of his employer. It is implied that in every act of willful
disobedience, the erring employee obtains undue advantage
detrimental to the business interest of the employer. 49
In the present case, there is no question that Reyes' refusal to certify
the Report on Crimes and Losses was intentional. This is clearly
disobedience. However, we find that the same is not attended by a wrongful
and perverse mental attitude which warrants the ultimate penalty of
dismissal.
A review of the findings below will reveal that Reyes refused to certify
said report based on his honest assessment that the report cannot be
completely validated for lack of material data and evidence. Indeed, as
found by the CA:
As a consequence, in compliance with the Manual of
Regulations for Banks (MORB) mandating the prompt report of the
anomaly to the Bangko Sentral ng Pilipinas (BSP), the Board of
Directors of respondent RBSR approved a Report on Crimes and
Losses describing the manner of the irregularities committed, and
directed petitioner Reyes — as Compliance Officer — to certify the
same as part of the requirement. However, Reyes refused to
make the attestation on the reasoning that no independent
investigation was conducted and that he cannot completely
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 validate the report for lack of material data and evidence. 50
(Citations omitted.) (Emphasis supplied).
This assertion finds support in Memorandum No. 2013-02051 dated
February 14, 2013, and Memorandum No. 2013-022 52 dated February 22,
2013, both sent by Reyes to no less than the officers and directors of RBSR.
In these Memoranda, Reyes noted several deficiencies in the report and
even made recommendations in order to make the same compliant with BSP
regulations. In the Court's view, this betrays respondents' claim that Reyes
was involved in the theft/misappropriation allegedly committed by Bognot
and Eusebio. AcICHD

Respondents counter Reyes' defense by saying:

Petitioner Reyes alleged that there was no personal
investigation and judgment independent from the Audit Committee or
from the Management, and that the data and evidence were lacking
to satisfy a conclusion for the reporting of the discrepancy, so he
refused to file the Crimes and Losses Report. However, in Circular No.
587, Series of 2007, x x x Subsection X162.4 (d.2) states that "where
a thorough investigation and evaluation is necessary to complete the
report, an initial report submitted within the deadline may be
accepted: Provided that a complete report is submitted not later than
twenty (20) calendar days from termination of investigation." Thus,
his refusal is a gross negligence of his duties and obligations.
Otherwise, he could have submitted an initial report and made his
personal investigation and judgment independent from the Audit
Committee or from the Management and submitted the same within
the period mentioned. 53
The Court recognizes that there is reason for respondents'
disappointment, even infuriation, over Reyes and his actions. Surely, no
employer would find pleasure in a disobedient employee. Be that as it may,
imposing the ultimate penalty of dismissal for such action — which, as
already mentioned, obtains justification — and for such single instance, is
simply too harsh and downright unlawful. Besides, what is the penalty for the
late submission of the report? A miniscule monetary fine of P150.00 to
P450.00 per day of delay. 54 Of course, this is not to encourage non-
compliance with bank regulations, but is only mentioned to further highlight
the point that the penalty of dismissal imposed upon Reyes was terribly
disproportionate to his alleged infraction.
As a final note, it may be well to reiterate Justice Bellosillo's insightful
observation in Alhambra Industries, Inc. v. National Labor Relations
Commission: 55

TODAY employment is no longer just an ordinary human

activity. For most families the main source of their livelihood,
employment has now leveled off with property rights which no one
may be deprived of without due process of law.
Termination of employment is not anymore a mere cessation or
severance of contractual relationship but an economic phenomenon
affecting members of the family. This explains why under the broad
principles of social justice the dismissal of employees is adequately
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 protected by the laws of the state. x x x 56

WHEREFORE, the Petition is hereby GRANTED. The July 22, 2016

Decision of the Court of Appeals and March 8, 2017 Resolution in CA-G.R. SP
No. 139099, are REVERSED and SET ASIDE. The February 24, 2014
Decision of the Labor Arbiter in NLRC Case No. RAB-III-03-19924-13, is
REINSTATED with a MODIFICATION in that petitioner Ariel M. Reyes'
backwages shall be computed from the time of dismissal up to the finality of
this Decision. All other matters not otherwise modified stand.
SO ORDERED.
Zalameda, Rosario and Marquez, JJ., concur.
Perlas-Bernabe, * J., is on official leave.

Footnotes
* On official leave.

** Per Office Order No. 2882 dated March 17, 2022.

1. Rollo , pp. 26-115.

2. CA rollo, pp. 121-133. Penned by Associate Justice Manuel M. Barrios and

concurred in by Associate Justices Ramon M. Bato, Jr. and Maria Elisa Sempio
Diy.
3. Id. at 168-170.

4. Id. at 26-36.
5. Id. at 220-229.

6. Id. at 37.

7. Rollo , p. 93.
8. CA rollo, pp. 220-229.

9. Id. at 228-229.

10. Id. at 26-36.

11. Id. at 35-36.

12. Id. at 3-15.

13. Id. at 121-133.

14. Id. at 127.

15. Id. at 128.

16. Id. at 133.

17. Id. at 168-170.

18. Rollo , p. 29.

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 19. Id. at 122.

20. Saunar v. Ermita , 822 Phil. 536, 555 (2017).

21. JOAQUIN G. BERNAS, S.J., THE 1987 CONSTITUTION OF THE REPUBLIC OF THE
PHILIPPINES: A COMMENTARY, at 116. (2009 Edition).

22. CA rollo, pp. 220-221.

23. Id. at 90-115.

24. Id. at 95.

25. Id. at 127-128.

26. Id. at 31-32.

27. 574 Phil. 20 (2008), citing Republic v. Hernandez, 323 Phil. 606, 630-631
(1996).
28. Id. at 37-38.

29. 723 Phil. 515 (2013).

30. Id. at 528.

31. Rollo , p. 122.

32. Entitled "A DECREE INSTITUTING A LABOR CODE THEREBY REVISING AND
CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD PROTECTION TO
LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES DEVELOPMENT
AND INSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE [LABOR CODE OF
THE PHILIPPINES]" Approved: May 1, 1974.

33. Fuji Television Network, Inc. v. Espiritu, 749 Phil. 388, 428 (2014).
34. 271 Phil. 196 (1991).

35. Id. at 204.

36. CESARIO A. AZUCENA, JR., THE LABOR CODE WITH COMMENTS AND CASES, at
26. (2010 Ed.).
37. Id. at 27.

38. CA rollo, pp. 104-105.

39. Id.

40. Id. at 106.

41. Id. at 110.

42. Id.

43. Id. at 112.

44. Id.

45. 553 Phil. 108 (2007).

46. Id. at 115-116.

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 47. CA rollo, pp. 131-132.
48. 716 Phil. 533 (2013).

49. Id. at 543-544.

50. CA rollo, p. 123.

51. Id. at 51.

52. Id. at 52.

53. Rollo , p. 123.

54. Section 171, Manual of Regulations for Banks (2018).

55. 308 Phil. 249 (1994).

56. Id. at 250.

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